Heirs of Ramon Durano, Sr. vs. Uy

238
SUPREME COURT REPORTS ANNOTATED

Heirs of Ramon Durano, Sr. vs. Uy
*
G.R. No. 136456. October 24, 2000.
HEIRS OF RAMON DURANO, SR., RAMON DURANO III,

AND ELIZABETH HOTCHKISS DURANO, petitioners, vs.
SPOUSES ANGELES SEPULVEDA UY AND EMIGDIO
BING SING UY, SPOUSES FAUSTINO ALATAN AND
VALERIANA GARRO, AURELIA MATA, SILVESTRE
RAMOS, HERMOGENES TITO, TEOTIMO GONZALES,
PRIMITIVA GARRO, JULIAN GARRO, ISMAEL GARRO,
BIENVENIDO CASTRO, GLICERIO BARRIGA, BEATRIZ
CALZADA, ANDREA MATA DE BATULAN, TEOFISTA
ALCALA,
FILEMON
LAVADOR,
CANDELARIO
LUMANTAO, GAVINO QUIMBO, JUSTINO TITO,
MARCELINO
GONZALES,
SALVADOR
DAYDAY,
VENANCIA REPASO, LEODEGARIO GONZALES, and
RESTITUTA GONZALES, respondents.
Appeals Assignment of Errors The Court of Appeals is
imbued with sufficient discretion to review matters, not otherwise
assigned as errors on appeal, if it finds that their consideration is
necessary in arriving at a complete and just resolution of the case.
We find untenable petitioners argument that since no party
(whether petitioners or respondents) appealed for the return of
the properties to respondents other than Repaso, Tito and
Gonzales, that portion of the RTC decision that awards damages
to such other respondents is final and may no longer be altered by
the Court of Appeals. A reading of the provisions of Section 8,
Rule 51, aforecited, indicates that the Court of Appeals is not
limited to reviewing only those errors assigned by appellant, but
also those that are closely related to or dependent on an assigned
error. In other words, the Court of Appeals is imbued with
sufficient discretion to review matters, not otherwise assigned as
errors on appeal, if it finds that their consideration is necessary in
arriving at a complete and just resolution of the case. In this case,
the Court of Appeals ordered the return of the properties to
respondents merely as a legal consequence of the finding that
respondents had a better right of possession than petitioners over
the disputed properties, the former being possessors in the
concept of owner.
Ownership Prescription Ordinary acquisitive prescription, in
the case of immovable property, requires possession of the thing in
good faith and with just title, for a period of ten years.Ordinary
acquisitive prescription, in the case of immovable property,
requires possession of the
_______________
*
THIRD DIVISION.
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VOL. 344, OCTOBER 24, 2000
239
thing in good faith and with just title, for a period often years. A
possessor is deemed to be in good faith when he is not aware of
any flaw in his title or mode of acquisition of the property. On the
other hand, there is just title when the adverse claimant came
into possession of the property through one of the modes for
acquiring ownership recognized by law, but the grantor was not
the owner or could not transmit any right. The claimant by
prescription may compute the tenyear period by tacking his
possession to that of his grantor or predecessorininterest.
Same Land Titles Notarial Law Fraud in the issuance of a
certificate of title may be raised only in an action expressly
instituted for that purpose, and not collaterally as in an action for
reconveyance and damages Unregistrability of the deed of sale is a
serious defect that should affect the validity of the certificates of
title Notarization of the deed of sale is essential to its
registrability, and the action of the Register of Deeds in allowing
the registration of the unacknowledged deed of sale is
unauthorized and does not render validity to the registration of the
document.It is true that fraud in the issuance of a certificate of
title may be raised only in an action expressly instituted for that
purpose, and not collaterally as in the instant case which is an
action for reconveyance and damages. While we cannot sustain
the Court of Appeals finding of fraud because of this
jurisdictional impediment, we observe that the aboveenumerated
circumstances indicate none too clearly the weakness of
petitioners evidence on their claim of ownership. For instance,
the nonproduction of the alleged reconstituted titles of Cepoc
despite demand therefor gives rise to a presumption (unrebutted
by petitioners) that such evidence, if produced, would be adverse

to petitioners. Also, the unregistrability of the deed of sale is a
serious defect that should affect the validity of the certificates of
title. Notarization of the deed of sale is essential to its
registrability, and the action of the Register of Deeds in allowing
the registration of the unacknowledged deed of sale was
unauthorized and did not render validity to the registration of the
document.
Same Same A buyer who could not have failed to know or
discover that the land sold to him was in the adverse possession of
another is a buyer in bad faith.A purchaser of a parcel of land
cannot close his eyes to facts which should put a reasonable man
upon his guard, such as when the property subject of the purchase
is in the possession of persons other than the seller. A buyer who
could not have failed to know or discover that the land sold to him
was in the adverse possession of another is a buyer in bad faith.
In the herein case, respondents were in open possession and
occupancy of the properties when Durano & Co. supposedly
purchased the
240
240

same from Cepoc. Petitioners made no attempt to investigate the

nature of respondents possession before they ordered demolition
in August 1970.
Same Same The rule on indefeasibility of title, i.e., that
Torrens titles can be attacked for fraud only within one year from
the date of issuance of the decree of registration, does not
altogether deprive an aggrieved party of a remedy at lawan
action for reconveyance may prosper if a property wrongfully
registered has not passed to an innocent purchaser for value.In
the same manner, the purchase of the property by petitioner
Ramon Durano III from Durano & Co. could not be said to have
been in good faith. It is not disputed that Durano III acquired the
property with full knowledge of respondents occupancy thereon.
There even appears to be undue haste in the conveyance of the
property to Durano III, as the bulldozing operations by Durano &
Co. were still underway when the deed of sale to Durano III was
executed on September 15, 1970. There is not even an indication
that Durano & Co. attempted to transfer registration of the
property in its name before it conveyed the same to Durano III. In
the light of these circumstances, petitioners could not justifiably
invoke the defense of indefeasibility of title to defeat respondents

claim of ownership by prescription. The rule on indefeasibility of
title, i.e., that Torrens titles can be attacked for fraud only within
one year from the date of issuance of the decree of registration,
does not altogether deprive an aggrieved party of a remedy at law.
As clarified by the Court in Javier vs. Court of AppealsThe
decree (of registration) becomes incontrovertible and can no
longer be reviewed after one (1) year from the date of the decree
so that the only remedy of the landowner whose property has
been wrongfully or erroneously registered in anothers name is to
bring an ordinary action in court for reconveyance, which is an
action in personam and is always available as long as the property
has not passed to an innocent third party for value. If the
property has passed into the hands of an innocent purchaser for
value, the remedy is an action for damages. In the instant case,
respondents action for reconveyance will prosper, it being clear
that the property, wrongfully registered in the name of petitioner
Durano III, has not passed to an innocent purchaser for value.
Same Same Builders in Bad Faith Remedies of the owner on
whose land somebody has built in bad faith.Based on these
provisions, the owner of the land has three alternative rights: (1)
to appropriate what has been built without any obligation to pay
indemnity therefor, or (2) to demand that the builder remove
what he had built, or (3) to compel the builder to pay the value of
the land. In any case, the landowner is entitled to damages under
Article 451, abovecited.
241
VOL. 344, OCTOBER 24, 2000
241
Same Same Same Although Article 451 does not elaborate

on the basis for damages that the owner of the land may recover
from a builder in bad faith, the Court perceives that it should
reasonably correspond with the value of the properties lost or
destroyed as a result of the occupation in bad faith, as well as the
fruits (natural, industrial or civil) from those properties that the
owner of the land reasonably expected to obtain.The right of the
owner of the land to recover damages from a builder in bad faith
is clearly provided for in Article 451 of the Civil Code. Although
said Article 451 does not elaborate on the basis for damages, the
Court perceives that it should reasonably correspond with the
value of the properties lost or destroyed as a result of the
occupation in bad faith, as well as the fruits (natural, industrial
or civil) from those properties that the owner of the land
reasonably expected to obtain. We sustain the view of the lower

courts that the disparity between respondents affidavits and
their tax declarations on the amount of damages claimed should
not preclude or defeat respondents right to damages, which is
guaranteed by Article 451. Moreover, under Article 2224 of the
Civil Code: Temperate or moderate damages, which are more
than nominal but less than compensatory damages, may be
recovered when the court finds that some pecuniary loss has been
suffered but its amount cannot, from the nature of the case, be
proved with certainty.
Corporation Law Doctrine of Piercing the Veil of Corporate
Fiction Test.The test in determining the applicability of the
doctrine of piercing the veil of corporate fiction is as follows: 1.
Control, not mere majority or complete stock control, but complete
domination, not only of finances but of policy and business
practice in respect to the transaction attacked so that the
corporate entity as to this transaction had at the time no separate
mind, will or existence of its own 2. Such control must have been
used by the defendant to commit fraud or wrong, to perpetuate
the violation of a statutory or other positive legal duty, or
dishonest and unjust acts in contravention of plaintiffs legal
rights and 3. The aforesaid control and breach of duty must
proximately cause the injury or unjust loss complained of. The
absence of any one of these elements prevents piercing the
corporate veil. In applying the instrumentality or alter ego
doctrine, the courts are concerned with reality and not form, with
how the corporation operated and the individual defendants
relationship to that operation.
Same Same The question of whether a corporation is a mere
alter ego is purely one of fact.The question of whether a
corporation is a mere alter ego is purely one of fact. The Court
sees no reason to reverse the finding of the Court of Appeals. The
facts show that shortly after the
242
242

purported sale by Cepco to Durano & Co., the latter sold the
property to petitioner Ramon Durano III, who immediately
procured the registration of the property in his name. Obviously,
Durano & Co. was used by petitioners merely as an
instrumentality to appropriate the disputed property for
themselves.
PETITION for review on certiorari of a decision of the

Court of Appeals.
The facts are stated in the opinion of the Court.
Rodrigo, Berenguer & Guno for petitioners.
Batiquin & Batiquin Law Office for respondents.
GONZAGAREYES, J.:
Petitioners seek the reversal of the decision of the First
Division of the Court of Appeals dated November 14, 1997
in CAG.R. CV No. 27220, entitled Heirs of Ramon
Durano, Sr., et al. versus Spouses Angeles Supelveda Uy,
et al., and the resolution of the Court of Appeals dated
October 29, 1998 which denied petitioners motion for
reconsideration.
The antecedents of this case may be traced as far back
as August 1970 it involves a 128hectare parcel of land
located in the barrios of Dunga and Cahumayhumayan,
Danao City. On December 27, 1973, the late Congressman
Ramon Durano, Sr., together with his son Ramon Durano
III, and the latters wife, Elizabeth Hotchkiss Durano
(petitioners in the herein case), instituted an action for
damages against spouses Angeles Supelveda Uy and
Emigdio Bing Sing Uy, spouses Faustino Alatan and
Valeriana Garro, spouses Rufino Lavador and Aurelia
Mata, Silvestre Ramos, Hermogenes Tito, Teotimo
Gonzales, Primitiva Garro, Julian Garro, Ismael Garro,
Bienvenido Castro, Glicerio Barriga, Beatriz Calzada,
Andrea Mata de Batulan, Teofista Alcala, Filemon
Lavador, Candelario Lumantao, Gavino Quimbo, Justino
Tito, Marcelino Gonzales, Salvador Dayday, Venancia
Repaso, Leodegario Gonzales, Jose de La Calzada,
Restituta Gonzales, and Cosme Ramos (herein respon
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VOL. 344, OCTOBER 24, 2000
243

1
dents ) before Branch XVII of the then Court of First

Instance of Cebu, Danao City.
In that case, docketed as Civil Case No. DC56,
petitioners accused respondents of officiating a hate
campaign against them by lodging complaints in the Police
Department of Danao City in August 1970, over petitioners
socalled invasion of respondents alleged properties in
Cahumayhumayan, Danao City. This was followed by
another complaint sent by respondents to the President of

the Philippines in February 1971, which depicted
petitioners as oppressors, landgrabbers and usurpers
of respondents alleged rights. Upon the direction of the
President, the Department of Justice through City Fiscal
Jesus Navarro and the Philippine Constabulary of Cebu
simultaneously conducted investigations on the matter.
Respondents complaints were dismissed as baseless, and
they appealed the same to the Secretary of Justice, who
called for another investigation to be jointly conducted by
the Special Prosecutor and the Office of the City Fiscal of
Danao City. During the course of said joint investigation,
respondents Hermogenes Tito and Salvador Dayday again
lodged a complaint with the Office of the President, airing
the same charges of landgrabbing. The investigations on
this new complaint, jointly conducted by the 3rd Philippine
Constabulary Zone and the Citizens Legal Assistance
Office resulted in the finding2 that (petitioners) should not
be held answerable therefor.
Petitioners further alleged in their complaint before the
CFI that during the course of the above investigations,
respondents kept spreading false rumors and damaging
tales which
put petitioners into public contempt and
3
ridicule.
In their Answer, respondents lodged their affirmative
defenses, demanded the return of their respective
properties, and made counterclaims for actual, moral and
exemplary damages. Respon
_______________
1
With the exception of Rufino Lavador, Jose de la Calzada and Cosme
Ramos, who respondents in their Answer before the trial court declared
were only witnesses for respondents, and not claimants to the disputed
property. RTC Decision, 3 Records of the Case.
2
CA Decision Rollo, 4849.
RTC Decision, 2 Records of the Case.

244
244

dents stated that sometime in the early part of August

1970 and months thereafter they received mimeographed
notices dated August 2, 1970 and signed by the late Ramon
Durano, Sr., informing them that the lands which they are
tilling and residing in, formerly owned by the Cebu
Portland Cement Company (hereafter, Cepoc), had been

purchased by Durano & Co., Inc. The notices also declared
that the lands were needed by Durano & Co. for planting to
sugar and for roads or residences, and directed respondents
to immediately turn over the said lands to the
representatives of the company. Simultaneously, tall
bamboo poles with pennants at the tops thereof were
planted in some areas of the lands and metal sheets
bearing the initials RMD were nailed to posts.
As early as the first week of August 1970, and even
before many of the respondents received notices to vacate,
men who identified themselves as employees of Durano &
Co. proceeded to bulldoze the lands occupied by various
respondents, destroying in their wake the plantings and
improvements made by the respondents therein. On some
occasions, respondents alleged, these men fired shots in the
air, purportedly acting upon the instructions of petitioner
Ramon Durano III and/or Ramon Durano, Jr. On at least
one instance, petitioners Ramon Durano III and Elizabeth
Hotchkiss Durano were seen on the site of the bulldozing
operations.
On September 15, 1970, Durano & Co. sold the disputed
property to petitioner Ramon Durano III, who procured the
registration of these lands in his name under TCT No. T
103 and TCT No T104.
Respondents contended that the display of force and the
known power and prestige of petitioners and their family
restrained them from directly resisting this wanton
depredation upon their property. During that time, the
mayor of Danao City was Mrs. Beatriz Durano, wife of
Ramon Durano, Sr. and mother of petitioner Ramon
Durano III. Finding no relief from the local police, who
respondents said merely laughed at them for daring to
complain against the Duranos, they organized themselves
and sent a letter to then President Ferdinand Marcos
reporting dispossession of their properties and seeking a
determination of the ownership of the land. This
notwithstanding, the bulldozing operations contin
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VOL. 344, OCTOBER 24, 2000
245
ued until the City Fiscal was requested by the Department

of Justice to conduct an investigation on the matter. When,
on July 27, 1971, the City Fiscal announced that he would
be unable to conduct a preliminary investigation,
respondents urged the Department of Justice to conduct

the preliminary investigation. This was granted, and the
investigations which spanned the period March 1972 to
April 1973 led to the4 conclusion that respondents
complaint was untenable.
In their counterclaim, respondents alleged that
petitioners acts deprived most of them of their independent
source of income and have made destitutes of some of them.
Also, petitioners have done serious violence to respondents
spirit, as citizens and human beings, to the extent that one
of them had been widowed by the emotional
shock that the
5
damage and dispossession has caused. Thus, in addition to
the dismissal of the complaint, respondents demanded
actual damages for the cost of the improvements they made
on the land, together with the damage arising from the
dispossession itself moral damages for the anguish they
underwent as a result of the highhanded display of power
by petitioners in depriving them of their possession and
property as well as exemplary damages, attorneys fees
and expenses of litigation.
Respondents respective counterclaimsreferring to the
improvements destroyed, their values, and the
approximate areas of the properties they owned and
occupiedare as follows:
a) TEOFISTA ALCALATax Declaration No. 00223
.2400 ha. bulldozed on August, 10, 1970.
Improvements destroyed consist of 47 trees, 10
bundles beatilis firewood and 2 sacks of cassava, all
valued at P5,437.00. (Exh. B, including
submarkings)
b) FAUSTINO ALATAN and VALERIANA GARRO
Tax Declaration No. 30758 .2480 ha. Tax
Declaration No. 32974 .8944 ha. Tax Declaration
No. 38908 .8000 ha. Bulldozed on September 9,
1970 Improvements destroyed consist of 682 trees,
a cornfield with one cavan per harvest 3 times a
year, valued at P71,770.00 Bulldozed on March 13,
1971 753 trees, 1,000 bundles beatilis firewood
every year, valued at P29,100.00 Cut down in the
later part of March, 197122 trees, 1,000
______________
4
Ibid., 55.
246
246

c)
d)
e)
f)
bundles beatilis firewood every year, 6 cavans corn

harvest per year, valued at P1,940.00 or a total
value of P102,810.00. (Exh. C, including
submarkings)
ANDREA MATA DE BATULANTax Declaration
No. 33033 .4259 ha. bulldozed on September 11,
1970. Improvements destroyed consist of 512 trees
and 15 sacks cassava all valued at P79,425.00.
(Exh. D, including submarkings)
GLICERIO BARRIGATax Declaration No. 32290
.4000 ha. bulldozed on September 10, 1990.
Improvements destroyed consist of 354 trees,
cassava field if planted with corn good for one liter,
30 cavans harvest a year of corn, and one resthouse,
all valued at P35,500.00. (Exh. E, including
submarkings)
BEATRIZ CALZADATax Declaration No. 03449
.900 ha. Bulldozed on June 16, 1971.
Improvements destroyed consist of 2,864 trees,
1,600 bundles of beatilis firewood, 12 kerosene cans
cassava every year and 48 cavans harvest a year of
corn all valued at P34,800.00. (Exh. F, including
submarkings)
BIENVENIDO CASTROTax Declaration No.
04883 .6000 ha. bulldozed on September 10, 1970.
sacks cassava every year, 500 bundles beatilis
firewood every year, 60 cavans corn harvest per
year, all valued at P5,550.00. (Exh. G, including
submarkings)
g) ISMAEL GARROTax Declaration No. 7185 2

has. Bulldozed in August, 1970. Improvements
destroyed consist of 6 coconut trees valued at
P1,800.00. Bulldozed on February 3, 1971
improvements destroyed consist of 607 trees, a corn
field of 5 cavans produce per harvest thrice a year,
all valued at P67,890.00. (Exh. H, including
submarkings)
h) JULIAN GARROTax Declaration No. 28653 1
ha. Bulldozed in the latter week of August, 1970.
bamboo grove, 1 tisa, 1,000 bundles of beatilis
firewood, 24 cavans harvest a year of corn, all
valued at P46,060.00. (Exh. I, including
submarkings)
i) PRIMITIVA GARROTax Declaration No. 28651
.3000 ha. Bulldozed on September 7, 1970.
pineapples, a cassava field, area if planted with
corn good for 1/2 liter, sweet potato, area if planted
with corn good for 1/2 liter all valued at P10,410.00.
(Exh. J, including submarkings)
j) TEOTIMO GONZALESTax Declaration No.
38159 .8644 ha. Tax Declaration No. 38158 .8000
ha. Bulldozed on September 10, 1970
improvements destroyed consist of 460 trees valued
at P20,000.00. Bull
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VOL. 344, OCTOBER 24, 2000
247
dozed on December 10, 1970Improvements

destroyed consist of 254 trees valued at P65,600.00
or a total value of P85,600.00. (Exh. K, including
submarkings)
k) LEODEGARIO GONZALESTax Declaration No.
36884 Bulldozed on February 24, 1971.
ubi, 15 cavans harvest a year of corn, all valued at
P72,270.00. (Exh. L, including submarkings)
l) FILEMON LAVADORTax Declaration No. 14036
1 ha. Bulldozed on February 5, 1971.
Improvements destroyed consist of 675 trees and 9
cavans harvest a year of corn all valued at
P63,935.00. (Exh. M, including submarkings)
m) CANDELARIO LUMANTAOTax Declaration No.
18791 1.660 ha. Bulldozed on the second week of
August, 1970Improvements destroyed consist of
1,377 trees, a cornfield with 3 cavans per harvest
thrice a year and a copra dryer all valued at
P193,960.00. Bulldozed on February 26, 1971
Improvements destroyed consist of 44 trees, one pig
pen and the fence thereof and the chicken roost all
valued at P12,650.00. Tax Declaration No. 33159
3.500 has. Bulldozed in the last week of March,
1971Improvements destroyed consist of 13 trees
valued at P1,550.00. Bulldozed in the latter part
consist of 6 Bamboo groves and IpilIpil trees
valued at P700.00 with total value of P208,860.00.

(Exh. N, including submarkings)
n) AURELIA MATATax Declaration No. 38071
.3333 ha. Bulldozed sometime in the first week of
March, 1971Improvements destroyed consist of
344 trees and 45 cavans corn harvest per year
valued at P30,965.00. (Exh. Q, including
submarkings)
o)
GAVINO
QUIMBOTax
Declaration No. 33231 2.0978 has. Tax
Declaration No. 24377 .4960 ha. (.2480 ha.
Belonging to your defendant) Bulldozed on
September 12, 1970Improvements destroyed
consist of 200 coconut trees and 500 banana fruit
trees valued at P68,500.00. Bulldozed on consist of
59 trees, 20 sacks cassava and 60 cavans harvest a
year of corn valued at P9,660.00 or a total value of
P78,160.00. (Exh. R, including submarkings)
p) SILVESTRE RAMOSTax Declaration No. 24288
1.5568 has. Bulldozed on February 23, 1971.
Improvements destroyed consist of 737 trees, a
cornfield with 3 cavans per harvest 3 times a year
and 50 bundles of beatilis firewood, all valued, at
P118,170.00. (Exh. S, including submarkings)
q) MARCELINO GONZALESTax Declaration No.
34057 .4049 ha. Bulldozed on March 20, 1972
Improvements destroyed consist of 5 coconut trees
and 9 cavans harvest a year of corn valued at
P1,860.00.
248
248

Bulldozed on July 4, 1972destroying 19 coconut

trees valued at P5,700.00 or a total value of
P7,560.00. (Exh. U, including submarkings)
r) JUSTINO TITOTax Declaration No. 38072 .2000
has. Bulldozed on February 25, 1971
Improvements destroyed consist of 338 trees and 5
kamongay all valued at P29,650.00. (Exh. T,
including submarkings)
s) EMIGDIO BING SING UY and ANGELES
SEPULVEDA UYTransfer Certificate of Title No.
T35 (Register of Deeds of Danao City) 140.4395
has. Area bulldozed 20.000 has. Bulldozed on
August 5, 6 and 7, 1970destroying 565 coconut

trees, 21/2 yrs. old, 65,422 banana groves with
3,600 mango trees, 3 years old, grafted and about to
bear fruit valued at P212,260.00. Bulldozed on
November 24, 1970 and on February 16, 1971
destroying 8,520 madricacao trees and 24
cylindrical cement posts boundaries valued at
P18,540.00. Bulldozed on November 24, 1970
destroying 90 coconut trees, 3 years old cornfield at
40 cavans per harvest and at 3 harvests a year (120
cavans) valued at P31,800.00. Bulldozed on
February 16, 1971destroying 25,727 trees and
sugarcane field value P856,725.00 or a total value
of P1,123,825.00. (Exh. V, including submarkings)
t) SALVADOR DAYDAYTax Declaration No.
(unnumbered) dated September 14, 1967 4.000 has.
Bulldozed on May 6, 1971destroying 576 trees, 9
cavans yearly of corn, 30 kerosene cans of cassava
yearly valued at P4,795.00. Bulldozed from March
26, 1973 to the first week of April, 1973destroying
108 trees and cornland, 6 cavans harvest per year
valued at P53,900.00 or a total value of P58,695.00.
(Exh. A, including submarkings)
u) VENANCIA REPASOTax Declaration No. 18867
1.1667 has. Bulldozed on April 15, 1971
Improvements destroyed were 775 trees, 500 abaca,
about to be reaped, and being reaped 3 times a year
2 bamboo groves all valued at P47,700.00. (Exh. O,
including submarkings)
v) HERMOGENES TITOTax Declaration No. 38009
over one (1) ha. Bulldozed in the latter part of
September, 1970destroying 1 coconut tree, 18
sacks of corn per year valued at P1,020.00.
Bulldozed on March 15, 1973destroying 2 coconut
trees, 5 buri trees, 1 bamboo grove valued at
P1,400.00. Bulldozed on March 26, 1974
destroying 3 coconut trees valued at P1,500.00 with
a total value6 of P3,920.00. (Exh. P, including
submarkings).
______________
6
Ibid., 5054.
249
VOL. 344, OCTOBER 24, 2000
249
On April 22, 1975, petitioners moved to dismiss their

complaint with the trial court. The trial court granted the
motion to dismiss, without prejudice to respondents right
to proceed with their counterclaim.
Hence, the trial proceeded only on the counterclaim.
On September 23, 1980, this Court issued a resolution in
Administrative Matter No. 6290 changing the venue of trial
in Civil Case No. DC56 to the Regional Trial Court of Cebu
City. The change was mainly in line with the transfer of
Judge Bernardo Ll. Salas, who presided over the case in
Danao City, to Cebu City.
The parties agreed to dispense with pretrial, and for the
evidenceinchief to be submitted byway of affidavits
together with a schedule of documentary exhibits, subject
to additional direct examination, cross examination and
presentation of rebuttal evidence by the parties.
The trial court and later, the Court of Appeals, took note
of the following portions of affidavits submitted by
petitioners:
x x x City Fiscal Jesus Navarro said that in August,
1967, he issued subpoenas to several tenants in
Cahumayhumayan upon representation by Cepoc, the
latter protesting failure by the tenants to continue giving
Cepoc its share of the corn produce. He learned from the
tenants that the reason why they were reluctant and as a
matter of fact some defaulted in giving Cepoc its share, was
that Uy Bing Sepulveda made similar demands to them for
his share in the produce, and that they did not know to
whom the shares should be given.
x x x x x x x x x
Jesus Capitan said that he is familiar with the place
Cahumayhumayan and that the properties in said locality were
acquired by Durano and Company and Ramon Durano III, but
formerly owned by Cepoc.
When the properties of Ramonito Durano were cultivated, the
owners of the plants requested him that they be given something
for their effort even if the properties do not belong to them but to
Cepoc, and that he was directed by Ramonito Durano to do a
listing of the improvements as well as the owners. After he made
a listing, this was given to Ramonito who directed Benedicto
Ramos to do payment.
When he was preparing the list, they did not object to the
removal of the plants because the counterclaimants understood
that the lands did not belong to them, but later and because of
politics a complaint was filed, and
250
250

finally that when he was doing the listing, the improvements

were even pointed to him by the counterclaimants themselves.
(Exh. 48, Records, p. 385386).
x x x x x x x x x
Ruperto Rom said that he had an occasion to work at Cepoc
from 1947 to 1950 together with Benedicto and Tomas Ramos, the
latter a capataz of the Durano Sugar Mills. Owner of the
properties, subject of the complaint, was Cepoc.
The persons who eventually tilled the Cepoc properties were
merely allowed to do cultivation if planted to corn, and for Cepoc
to be given a share, which condition was complied with by all
including the counterclaimants. He even possessed one parcel
which he planted to coconuts, jackfruit trees and other plants.
(Exh. 51, Records, pp. 383384)
x x x x x x x x x
Codefendant Ramon Durano III said that he agreed with the
dismissal of the complaint because his fathers wish was
reconciliation with the defendants following the death of Pedro
Sepulveda, father of Angeles Sepulveda Uy, but inspite of the
dismissal of the complaint, the defendants still prosecuted their
counterclaim.
The disputed properties were owned formerly by Cepoc, and
then of the latter selling the properties to Durano and Company
and then by the latter to him as of September 15, 1970. As a
matter of fact, TCT T103 and T104 were issued to him and that
from that time on, he paid the taxes.
At the time he purchased the properties, they were not
occupied by the defendants. The first time he learned about the
alleged bulldozing of the improvements was when the defendants
filed the complaint of land grabbing against their family with the
Office of the President and the attendant publicity. Precisely his
family filed the complaint against them. (Exh. 57, Records, pp.
723730)
x x x x x x x x x
Congressman Ramon Durano said he is familiar with the
properties, being owned originally by Cepoc. Thereafter they were
purchased by Durano and Company and then sold to Ramon
Durano III, the latter now the owner. He filed a motion to dismiss
the case against Angeles Sepulveda, et al. as a gesture of respect
to the deceased Pedro Sepulveda, father of Angeles Sepulveda,
and as a Christian, said Pedro Sepulveda being the former Mayor
of Danao, if only to stop all misunderstanding between their
families.
x x x x x x x x x
251
VOL. 344, OCTOBER 24, 2000
251

He was the one who did the discovery of the properties that
belonged to Cepoc, which happened when he was doing mining
work near Cahumayhumayan and without his knowledge
extended his operation within the area belonging to Cepoc. After
Cepoc learned of the substantial coal deposits, the property was
claimed by Cepoc and then a survey was made to relocate the
muniments. Eventually he desisted doing mining work and
limited himself within the confines of his property that was
adjacent to Cepocs property. All the claimants except Sepulveda
Uy were occupants of the Cepoc properties. Durano and Company
purchased the property adjacent to Cepoc, developed the area,
mined the coal and had the surveyed area planted with sugar
cane, and finally the notices to the occupants because of their
intention to plant sugar cane and other crops (T.S.N. December 4,
1985,7 pp. 3132, 4454, RTC Decision, pp. 1619, Records, pp. 842
845).
Petitioners also presented Court Commissioner, Engineer

Leonidas Gicain, who was directed by the trial court to
conduct a field survey of the disputed property. Gicain
conducted surveys on the areas subjected to bulldozing,
including those outside the Cepoc properties. The survey
which was based on TCT No. T103 and TCT No. T104,
titled in the name of Ramon Durano III, and TCT No. 35, in
the name of respondent
Emigdio Bing Sing Uywas paid
8
for by petitioners.
Respondents, for their part, also presented their
affidavits and supporting documentary evidence, including
tax declarations covering such portions of the property as
they formerly inhabited and cultivated.
On March 8, 1990, the RTC issued a decision upholding
respondents counterclaim. The dispositive portion of said
decision reads:
THE FOREGOING CONSIDERED, judgment is hereby rendered
in favor of the counter claimants and against the plaintiffs
directing the latter to pay the former:
a)
With respect to Salvador Dayday
b)
With respect to Teofista Alcala
c)
With respect to Faustino Alatan
P 14,400.00
4,400.00
118,400.00
d)
With respect to Andrea Mata de Batulan
115,050.00
_______________
7
Ibid., Rollo, 58.
252
252

e)
With respect to Glicerio Barriga
35,500.00
f)
With respect to Beatriz Galzada
70,300.00
g)
With respect to Bienvenido Castro
h)
With respect to Ismael Garro
66,060.00
i)
With respect to Julian Garro
48,600.00
j)
With respect to Primitiva Garro
13,000.00
k)
With respect to Teotimo Gonzales
63,200.00
1)
With respect to Leodegario Gonzales
85,300.00
m)
With respect to Filemon Lavador
70,860.00
n)
With respect to Venancia Repaso
101,700.00
o)
With respect to Candelario Lumantao
192,550.00
p)
With respect to Hermogenes Tito
q)
With respect to Aurelia Mata
28,560.00
r)
With respect to Gavino Quimbo
81,500.00
s)
With respect to Silvestre Ramos
101,700.00
t)
With respect to Justino Tito
u)
With respect to Marcelino Gonzales
v)
With respect to Angeles Supelveda
5,000.00
1,200.00
27,800.00
2,360.00
902,840.00
P120,000.00 should be the figure in terms of litigation expenses

and a separate amount of P100,000.00 as attorneys fees.
Return of the properties to Venancia Repaso, Hermogenes Tito
and Marcelino Gonzales is hereby directed.
With respect to counter claimant Angeles Sepulveda Uy, return
of the property to her should be with respect to the areas outside
of the Cepoc property, as mentioned in the sketch, Exhibit 56A.
Finally with costs
against the plaintiffs.
9
SO ORDERED.
The RTC found that the case preponderated in favor of

respondents, who all possessed their respective portions of
the property covered by TCT Nos. T103 and T104
thinking that they were the absolute owners thereof. A
number of these respondents alleged that they inherited

these properties from their parents, who in turn inherited
them from their own parents. Some others came into the
properties by purchase from the former occupants thereof.
They and their predecessors were responsible for the
plantings and improvements on the property. They were
the ones who sought for
______________
9
RTC Decision Rollo, 114.

253
VOL. 344, OCTOBER 24, 2000
253
the properties to be taxdeclared in their respective names,

and they continually paid the taxes thereto. Respondents
maintained that they were unaware of anyone claiming
adverse possession or ownership of these lands until the
bulldozing operations in 1970.
As for Venancia Repaso, Hermogenes Tito and
Marcelino Gonzales, the Court found that the properties
they laid claim to were not part of the land that was
purchased by Durano & Co. from Cepoc. Thus, it found the
bulldozing of these lands by petitioners totally unjustified
and ordered not only the total reimbursement of useful and
necessary expenses on the properties but also the return of
these properties to Repaso, Tito and Gonzales, respectively.
As for all the other respondents, the RTC found their
possession of the properties to be in the concept of owner
and adjudged them to be builders in good faith.
Considering that petitioners in the instant case
appropriated the improvements on the areas overran by
the bulldozers, the RTC ruled that (t)he right of retention
to the improvements necessarily should be secured (in
favor of respondents) until reimbursed
not only of the
10
necessary but also useful expenses.
On the matter of litigation expenses and attorneys fees,
the RTC observed that the trial period alone consisted of
forty (40) trial dates spread over a period of sixteen (16)
years. At the time, respondents were represented by
counsel based in Manila, and the trial court took into
consideration the travel, accommodation and miscellaneous
expenses of their lawyer that respondents must have
shouldered during the trial of the case.
Dissatisfied, petitioners appealed the RTC decision to
the Court of Appeals, which, in turn, affirmed the said

decision and ordered the return of the property to all the
respondentsclaimants, in effect modifying the RTC
decision which allowed return only in favor of respondents
Repaso, Tito and Gonzales.
In its decision, the Court of Appeals upheld the factual
findings and conclusions of the RTC, including the awards
for actual damages, attorneys fees and litigation expenses,
and found additionally that the issuance of TCT Nos. T103
and T104 in the name of
_______________
10
Ibid., 111.
254
254

Ramon Durano III was attended by fraud. Evaluating the

evidence before it, the Court of Appeals observed that the
alleged reconstituted titles of Cepoc over the property,
namely, TCT No. (RT38) (T14457)4 and TCT No. (RT
39) (T14456)3 (Exhibits 19 and 20 of this case),
which were claimed to be the derivative titles of TCT Nos.
T103 and T104, were not submitted in evidence before the
RTC. Thus, in an Order dated June 15, 1988, the RTC
ordered Exhibits 19 and 20 deleted from petitioners
Offer of Exhibits. The Court of Appeals further noted that
even among the exhibits subsequently produced by
petitioners before the RTC,11 said Exhibits 19 and 20
were still not submitted. Moreover, Cepoc had no
registered title over the disputed property as indicated in
TCT Nos. T103 and T104. Thus:
TRANSFER CERTIFICATE OF TITLE
NO.103
x x x x x x
IT IS FURTHER CERTIFIED that said land was originally
registered on the N.A. day of N.A. in the year nineteen hundred
and N.A. in Registration Book No. N.A. page N.A. of the Office of
the Register of Deeds of N.A. as Original Certificate of Title No.
N.A. pursuant to a N.A. patent granted by the President of the
Philippines, on the N.A. day of N.A. in the year nineteen hundred
and N.A. under Act No. N.A.
This certificate is a transfer from Transfer Certificate of Title
No. (RT39) (T14456)3 which is cancelled by virtue hereof in so

far as the above described land is concerned.
x x x x x x
TRANSFER CERTIFICATE OF TITLE
NO. T104
x x x x x x
IT IS FURTHER CERTIFIED that said land was originally
registered on the N.A. day of N.A. in the year nineteen hundred
and N.A. in Registration Book No. N.A. page N.A. of the Office of
the Register of Deeds of N.A. as Original Certificate of Title No.
N.A., pursuant to a N.A. patent
________________
11
Submission of Copies of Some Missing Exhibits of Plaintiffs dated June 29,
1988 (Records of the Case, 774775) cited in CA DecisionRollo, 60.
255
VOL. 344, OCTOBER 24, 2000
255
granted by the President of the Philippines, on the N.A. day of

N.A. in the year nineteen hundred and N.A. under Act No. N.A.
This certificate is a transfer from Transfer Certificate of Title
No. (RT38) (T14457)4 which is cancelled 12by virtue hereof in so
far as the above described land is concerned.
From the foregoing, the Court of Appeals concluded that

the issuance of the TCT Nos. T103 and T104 in favor of
petitioner Ramon Durano III was attended by fraud hence,
petitioners could not invoke the principle of indefeasibility
of title. Additionally, the Court of Appeals found that the
alleged Deed of Absolute Sale, undated, between Cepoc
Industries, Inc. and Durano & Co. was not notarized and
thus, unregistrable.
The Court of Appeals went on to state that while, on the
one hand, no valid issuance of title may be imputed in favor
of petitioners from the private Deed of Sale and the alleged
reconstituted titles of Cepoc that were not presented in
evidence, respondents, in contrastwho although
admittedly had no registered titles in their nameswere
able to demonstrate possession that was public, continuous
and adverseor possession in the concept of owner, and
which was much prior (one or two generations back for
many of respondents) to the claim of ownership of
petitioners.
Thus, the Court of Appeals ordered the return of the

properties covered by TCT Nos. T103 and T104 to all
respondents who made respective claims thereto.
Corollarily, it declared that petitioners were possessors in
bad faith, and were not entitled to reimbursement for
useful expenses incurred in the conversion of the property
into sugarcane lands. It also gave no merit to petitioners
allegation that the actual damages awarded by the trial
court were excessive, or to petitioners argument that they
should not have been held personally liable for any
damages imputable to Durano & Co.
Following is the dispositive portion of the decision of the
Court of Appeals:
_______________
12

256
256

WHEREFORE, the appealed decision of the lower court in Civil

Case No. DC56 is hereby AFFIRMED with MODIFICATION
ordering the return of the respective subject properties to all the
defendantsappellees, without indemnity to the plaintiffs
appellants as regards whatever improvements made therein by
the latter. In all other respects, said decision in affirmed.
Costs against plaintiffsappellants.
13
SO ORDERED.
On October 29, 1998, the Court of Appeals denied

petitioners motion for reconsideration for lack of merit.
Hence, this petition.
Petitioners assign the following errors from the CA
decision:
1. The Court of Appeals erred in granting relief to the
respondents who did not appeal the decision of the
lower court.
2. The Court of Appeals erred in collaterally attacking
the validity of the title of petitioner Ramon Durano
III.
3. The respondents should not have been adjudged
builders in good faith.
4. The petitioners should not be held personally liable
for damages because of the doctrine of separate
corporate personality.
5. It was an error to hold that the respondents had
proved the existence of improvements on the land
by preponderance of evidence, and in awarding
excessive damages therefor.
6. It was error to direct the return of the properties to
respondents Venancia Repaso, Hermogenes Tito
and Marcelino Gonzales.
7. The award of litigation expenses and attorneys fees
was erroneous.
8. The petitioners are not possessors in bad faith.
On their first assignment of error, petitioners contend that
before the Court of Appeals, they only questioned that
portion of the RTC decision which directed the return of the
properties to respondents Repaso, Tito and Gonzales. They
argued that the return of
________________
13
Ibid. Rollo, 67. Written by Associate Justice B.A. Adefuinde la Cruz,
with Acting Presiding Justice Fidel P. Purisima and Associate Justice

Ricardo P. Galvez concurring.
257
VOL. 344, OCTOBER 24, 2000
257
the properties to all the other respondents by the Court of

Appeals was erroneous because it was not among the errors
assigned or argued by petitioners on appeal. Besides, since
respondents themselves did not appeal from the RTC
decision on the issue of return of the physical possession of
the property, it is understood that judgment as to them has
already become final by operation of law. To support its
argument, petitioners
cited the cases of Madrideo
vs. Court
14
15
of Appeals and Medida vs. Court of Appeals, which held
that whenever an appeal is taken in a civil case an
appellee who has not himself appealed cannot obtain from
the appellate court any affirmative relief other than the
ones granted in the decision of the court below.
Rule 51 of the New Rules of Civil Procedure provides:
Sec. 8. Questions that may be decided.No error which does not
affect the jurisdiction over the subject matter or the validity of the
judgment appealed from or the proceedings therein will be
considered unless stated in the assignment of errors, or closely

related to or dependent on an assigned error and properly argued
in the brief, save as the court may pass upon plain errors and
clerical errors.
We find untenable petitioners argument that since no

party (whether petitioners or respondents) appealed for the
return of the properties to respondents other than Repaso,
Tito and Gonzales, that portion of the RTC decision that
awards damages to such other respondents is final and
may no longer be altered by the Court of Appeals. A
reading of the provisions of Section 8, Rule 51, aforecited,
indicates that the Court of Appeals is not limited to
reviewing only those errors assigned by appellant, but also
those that are16 closely related to or dependent on an
assigned error. In other words, the Court of Appeals is
imbued with sufficient discretion to review matters, not
otherwise assigned as errors on appeal, if it finds that their
consideration is necessary in arriving at a complete and
just resolution of the case. In this case, the Court of
_______________
14
137 SCRA 797 (1985).
15
208 SCRA 887 (1992).
16
Philippine Commercial and Industrial Bank vs. Court of Appeals,
159 SCRA 24 (1988).

258
258

Appeals ordered the return of the properties to respondents

merely as a legal consequence of the finding that
respondents had a better right of possession than
petitioners over the disputed properties, the former being
possessors in the concept of owner. Thus, it held
Plaintiffsappellants have to return possession of the subject
property, not only to defendantsappellees Venancia Repaso,
Hermogenes Tito and Marcelino Gonzales but to all other
defendantsappellees herein, by virtue of the latters priority in
time of declaring the corresponding portions of the subject
properties in their name and/or their predecessorsininterest
coupled with actual possession of the same property through their
predecessorsininterest in the concept of an owner. Plaintiffs
appellants who had never produced in court a valid basis by
which they are claiming possession or ownership over the said

property cannot have a better right over the subject properties
17
than defendantsappellees.
Moreover, petitioners reliance on the Madrideo and

Medida cases is misplaced. In the Madrideo case, the
predecessorsininterest of the Llorente Group sold the
disputed property to the Alcala Group, who in turn sold the
same to the spouses Maturgo. The RTC adjudged the
spouses Maturgo purchasers in good faith, such that they
could retain their title to the property, but held that the
Llorente Group was unlawfully divested of its ownership of
the property by the Alcala Group. The Alcala Group
appealed this decision to the Court of Appeals, who denied
the appeal and ordered the reinstatement in the records of
the Registry of Deeds of the Original Certificates of Title of
the predecessorsininterest of the Llorente Group. In
setting aside the decision of the Court of Appeals, this
Court held that no relief may be afforded in favor of the
Llorente Group to the prejudice of the spouses Maturgo,
whothe Court carefully emphasizedwere third parties
to the appeal, being neither appellants nor appellees before
the Court of Appeals, and whose title to the disputed
property was confirmed by the RTC. The application of the
ruling in Madrideo to the instant case bears no justification
because it is clear that petitioners, in appealing the RTC
decision, impleaded all the herein respondents.
_______________
17

259
VOL. 344, OCTOBER 24, 2000
259
Meanwhile, in the Medida case, petitioners (who were the

appellees before the Court of Appeals) sought the reversal
of a finding of the RTC before the Supreme Court. The
Court explained that since petitioners failed to appeal from
the RTC decision, theyas appellees before the Court of
Appealscould only argue for the purpose of sustaining
the judgment in their favor, and could not ask for any
affirmative relief other than that granted by the court
below. The factual milieu in Medida is different from that
of the instant case, where the return of the properties to
respondents was not an affirmative relief sought by
respondents but an independent determination of the

Court of Appeals proceeding from its findings that
respondents were longstanding possessors in the concept
of owner while petitioners were builders in bad faith.
Certainly, under such circumstances, the Court of Appeals
is not precluded from modifying the decision of the RTC in
order to accord complete relief to respondents.
Moving now to the other errors assigned in the petition,
the return of the properties to respondents Repaso, Tito
and Gonzales was premised upon the factual finding that
these lands were outside the properties claimed by
petitioners under TCT Nos. T103 and T104. Such factual
finding of the RTC, sustained by the Court of Appeals, is
now final and binding upon this Court.
In respect of the properties supposedly covered by TCT
Nos. T103 and T104, the Court of Appeals basically
affirmed the findings of the RTC that respondents have
shown prior and actual possession thereof in the concept of
owner, whereas petitioners failed to substantiate a valid
and legitimate acquisition of the propertyconsidering
that the alleged titles of Cepoc from which TCT Nos. T103
and T104 were supposed to have derived title were not
produced, and the deed of sale between Cepoc and Durano
& Co. was unregistrable.
The records clearly bear out respondents prior and
actual possession more exactly, the records indicate that
respondents possession has ripened into ownership by
acquisitive prescription.
Ordinary acquisitive prescription, in the case of
immovable property, requires possession of the thing in
good faith and with
260
260

18
19
just title, for a period of ten years. A possessor is deemed

to be in good faith when he is not aware of 20any flaw in his
title or mode of acquisition of the property. On the other
hand, there is just title when the adverse claimant came
into possession of the property through one of the modes for
acquiring ownership recognized by law, but the grantor
21
was not the owner or could not transmit any right. The
claimant by prescription may compute the tenyear period
by tacking his possession
to that of his grantor or
22
predecessorininterest.
The evidence shows that respondents successfully
complied with all the requirements for acquisitive

prescription to set in. The properties were conveyed to
respondents by purchase or inheritance, and in each case
the respondents were in actual, continuous, open and
adverse possession of the properties. They exercised rights
of ownership over the lands, including the regular payment
of taxes and introduction of plantings and improvements.
They were unaware of anyone claiming to be the owner of
these lands other than themselves until the notices of
demolition in 1970and at the time each of them had
already completed the tenyear prescriptive period either
by their own possession or by obtaining from the possession
of their predecessorsininterest. Contrary to the allegation
of petitioners that the claims of all twentytwo (22)
respondents were lumped together and indiscriminately
sustained, the lower courts (especially the RTC) took
careful consideration of the claims individually, taking note
of the respective modes and dates of acquisition. Whether
respondents predecessorsininterest in fact had title to
convey is irrelevant under the concept of just title and for
purposes of prescription.
Thus, respondents counterclaim for reconveyance and
damages before the RTC was premised upon a claim of
ownership as indicated by the following allegations:
_______________
18
Civil Code, Art. 1117.
19
Id., Art. 1134.
20
Id., Art. 526.
21
Id., Art. 1129.
22
Id., Art. 1138.

261
VOL. 344, OCTOBER 24, 2000
261

(Y)our defendants are owners and occupants of different parcels of
land located in Barrio Cahumayhumayan, your defendants having
occupied these parcels of land for various periods by themselves or
through their predecessorsininterest, some for over fifty years,
and23 some with titles issued under the Land Registration Act x x x
xx
Respondents claim of ownership by acquisitive prescription

(in respect of the properties covered by TCT Nos. T103 and
T104) having been duly alleged and proven, the Court
deems it only proper that such claim be categorically

upheld. Thus, the decision of the Court of Appeals insofar
as it merely declares those respondents possessors in the
concept of owner is modified to reflect the evidence on
record which indicates that such possession had been
converted to ownership by ordinary prescription.
Turning now to petitioners claim to ownership and title,
it is uncontested that their claim hinges largely on TCT
Nos. T103 and T104, issued in the name of petitioner
Ramon Durano III. However, the validity of these
certificates of title was put to serious doubt by the
following: (1) the certificates reveal the
lack of registered
24
title of Cepoc to the properties
(2) the alleged
reconstituted titles of Cepoc were not produced in evidence
and (3) the deed of sale between Cepoc and Durano & Co.
was unnotarized and thus, unregistrable.
It is true that fraud in the issuance of a certificate of
title may be raised
only in an action expressly instituted for
25
that purpose, and not collaterally as in the instant case
which is an action for reconveyance and damages. While we
cannot sustain the Court of Appeals finding of fraud
because of this jurisdictional impediment, we observe that
the aboveenumerated circumstances indicate none too
clearly the weakness of petitioners evidence on their claim
of ownership. For instance, the nonproduction of the
alleged reconstituted titles of Cepoc despite demand
therefor gives rise to a presumption (unrebutted by
petitioners) that such evidence, if
________________
23
RTC Decision Rollo, 80.
24
See note 12.
25
Mallilin, Jr. vs. Castillo, G.R. No. 136803, June 16, 2000, 333 SCRA
628 Eduarte vs. Court of Appeals, 311 SCRA 18 P.D. 1529, Sec. 48.
262
262

26
produced, would be adverse to petitioners. Also, the

unregistrability of the deed of sale is a serious defect that
should affect the validity of the certificates of title.
Notarization 27of the deed of sale is essential to its
registrability, and the action of the Register of Deeds in
allowing the registration of the unacknowledged deed of
sale was unauthorized and did not render validity to the
28
registration of the document.
28
registration of the document.

Furthermore, a purchaser of a parcel of land cannot
close his eyes to facts which should put a reasonable man
upon his guard, such as when the property subject of the
purchase
is in the possession of persons other than the
29
seller. A buyer who could not have failed to know or
discover that the land sold to him was in
the adverse
30
possession of another is a buyer in bad faith. In the herein
case, respondents were in open possession and occupancy of
the properties when Durano & Co. supposedly purchased
the same from Cepoc. Petitioners made no attempt to
investigate the nature of respondents possession before
they ordered demolition in August 1970.
In the same manner, the purchase of the property by
petitioner Ramon Durano III from Durano & Co. could not
be said to have been in good faith. It is not disputed that
Durano III acquired the property with full knowledge of
respondents occupancy thereon. There even appears to be
undue haste in the conveyance of the property to Durano
III, as the bulldozing operations by Durano & Co. were still
underway when the deed of sale to Durano III was
executed on September 15, 1970. There is not even an
indication that Durano & Co. attempted to transfer
registration of the property in its name before it conveyed
the same to Durano III.
In the light of these circumstances, petitioners could not
justifiably invoke the defense of indefeasibility of title to
defeat respondents claim of ownership by prescription. The
rule on indefeasibil
________________
26
Rules of Court, Rule 131, Sec. 3(e).
27
P.D. 1529, Sec. 112.
28
Gallardo vs. Intermediate Appellate Court, 155 SCRA 248 (1987).
29
Republic vs. De Guzman, G.R. No. 105630, February 23, 2000, 326
SCRA 267 Embrado vs. Court of Appeals, 233 SCRA 355 (1994).
30
St. Peter Memorial Park, Inc. vs. Cleofas, 92 SCRA 389 (1979).
263
VOL. 344, OCTOBER 24, 2000
263
ity of title, i.e., that Torrens titles can be attacked for fraud
only within one year from the date of issuance of the decree
of registration, does not altogether deprive an aggrieved
party of a remedy at law. As clarified by the Court in
31
Javier vs. Court of Appeals
31
Javier vs. Court of Appeals

The decree (of registration) becomes incontrovertible and can no
longer be reviewed after one (1) year from the date of the decree
so that the only remedy of the landowner whose property has
been wrongfully or erroneously registered in anothers name is to
bring an ordinary action in court for reconveyance, which is an
action in personam and is always available as long as the property
has not passed to an innocent third party for value. If the
property has passed into the hands of an innocent purchaser for
value, the remedy is an action for damages.
In the instant case, respondents action for reconveyance

will prosper, it being clear that the property, wrongfully
registered in the name of petitioner Durano III, has not
passed to an innocent purchaser for value.
Since petitioners knew fully well the defect in their
titles, they were correctly held by the Court of Appeals to
be builders in bad faith.
The Civil Code provides:
Art. 449. He who builds, plants or sows in bad faith on the land of
another, loses what is built, planted or sown without right of
indemnity.
Art. 450. The owner of the land on which anything has been
built, planted or sown in bad faith may demand the demolition of
the work, or that the planting or sowing be removed, in order to
replace things in their former condition at the expense of the
person who built, planted or sowed or he may compel the builder
or planter to pay the price of the land, and the sower the proper
rent.
Art. 451. In the cases of the two preceding articles, the
landowner is entitled to damages from the builder, planter or
sower.
Based on these provisions, the owner of the land has three

alternative rights: (1) to appropriate what has been built
without any
_______________
31
231 SCRA 498 (1994) reiterated in Heirs of Pedro Lopez vs. De
Castro, G.R. No. 112905, February 3, 2000, 324 SCRA 591 Millena vs.
Court of Appeals, G.R. No. 127797, January 31, 2000, 324 SCRA 126.
264
264

obligation to pay indemnity therefor, or (2) to demand that

the builder remove what he had built, or
(3) to compel the
32
builder to pay the value of the land. In any case, the
landowner is entitled to damages under Article 451,
abovecited.
We sustain the return of the properties to respondents
and the payment of indemnity as being in accord with the
reliefs under the Civil Code.
On petitioners fifth assignment of error that
respondents had not proved the existence of improvements
on the property by preponderance of evidence, and that the
damages awarded by the lower courts were excessive and
not actually proved, the Court notes that the issue is
essentially factual. Petitioners, however, invoke Article
2199 of the Civil Code which requires actual damages to be
duly proved. Passing upon this matter, the Court of
Appeals cited with approval the decision of the RTC which
stated:
The counter claimants made a detail of the improvements that
were damaged. Then the query, how accurate were the listings,
supposedly representing damaged improvements. The Court
notes, some of the counter claimants improvements in the tax
declarations did not tally with the listings as mentioned in their
individual affidavits. Also, others did not submit tax declarations
supporting identity of the properties they possessed. The disparity
with respect to the former and absence of tax declarations with
respect to the latter, should not be a justification for defeating
right of reimbursement. As a matter of fact, no controverting
evidence was presented by the plaintiffs that the improvements
being mentioned individually in the affidavits did not reflect the
actual improvements that were overran by the bulldozing
operation. Aside from that, the City Assessor, or any member of
his staff, were not presented as witnesses. Had they been
presented by the plaintiffs, the least that can be expected is that
they would have enlightened the Court the extent of their
individual holdings being developed in terms of existing
improvements. This, the plaintiffs defaulted. It might be true that
there were tax declarations, then presented as supporting
documents by the counter claimants, but then mentioning
improvements but in variance with the listings in the individual
affidavits. This disparity similarly cannot be accepted as a basis
for the setting aside of the listing of improvements being adverted
to by the counter claimants in their affidavits. This Court is not
foreclosing
_______________
32
De Vera vs. Court of Appeals, 305 SCRA 624 (1999).
265
VOL. 344, OCTOBER 24, 2000
265
the possibility that the tax declarations on record were either

table computations by the Assessor or his deputy, or tax
declarations whose entries were merely copied from the old tax
declarations during
the period of revision. (RTC Decision, p. 36,
33
Records, p. 862)
The right of the owner of the land to recover damages from

a builder in bad faith is clearly provided for in Article 451
of the Civil Code. Although said Article 451 does not
elaborate on the basis for damages, the Court perceives
that it should reasonably correspond with the value of the
properties lost or destroyed as a result of the occupation in
bad faith, as well as the fruits (natural, industrial or civil)
from those properties that the owner of the land reasonably
expected to obtain. We sustain the view of the lower courts
that the disparity between respondents affidavits and their
tax declarations on the amount of damages claimed should
not preclude or defeat respondents right to damages, which
is guaranteed by Article 451. Moreover, under Article 2224
of the Civil Code:
Temperate or moderate damages, which are more than nominal
but less than compensatory damages, may be recovered when the
court finds that some pecuniary loss has been suffered but its
amount cannot, from the nature of the case, be proved with
certainty.
We also uphold the award of litigation expenses and

attorneys fees, it being clear that petitioners acts
compelled respondents to litigate and incur expenses to
regain rightful
possession and ownership over the disputed
34
property.
The last issue presented for our resolution is whether
petitioners could justifiably invoke the doctrine of separate
corporate personality to evade liability for damages. The
Court of Appeals applied the wellrecognized principle of
piercing the corporate veil, i.e., the law will regard the act
of the corporation as the act of its individual stockholders
when it is shown that the corporation was used merely as
an alter ego by those persons in the commission of fraud or
other illegal acts.
_______________
33
34
Civil Code, Art. 2208.

266
266

The test in determining the applicability of the doctrine of

piercing the veil of corporate fiction is as follows:
1. Control, not mere majority or complete stock control, but
complete domination, not only of finances but of policy and
business practice in respect to the transaction attacked so
that the corporate entity as to this transaction had at the
time no separate mind, will or existence of its own
2. Such control must have been used by the defendant to
commit fraud or wrong, to perpetuate the violation of a
statutory or other positive legal duty, or dishonest and
unjust acts in contravention of plaintiffs legal rights and
3. The aforesaid control and breach of duty must proximately
cause the injury or unjust loss complained of.
The absence of any one of these elements prevents piercing the
corporate veil. In applying the instrumentality or alter ego
doctrine, the courts are concerned with reality and not form, with
how the corporation operated
and the individual defendants
35
relationship to that operation.
The question of whether

a corporation is a mere alter ego is
36
purely one of fact. The Court sees no reason to reverse the
finding of the Court of Appeals. The facts show that shortly
after the purported sale by Cepco to Durano & Co., the
latter sold the property to petitioner Ramon Durano III,
who immediately procured the registration of the property
in his name. Obviously, Durano & Co. was used by
petitioners merely as an instrumentality to appropriate the
disputed property for themselves.
WHEREFORE, the instant petition is DENIED. The
decision of the Court of Appeals is MODIFIED to declare
respondents with claims to the properties covered by
Transfer Certificate of Title Nos. T103 and T104 owners
by acquisitive prescription to the extent of their respective
claims. In all other respects, the decision of the Court of
Appeals is AFFIRMED. Costs against petitioners.
_______________
35
Lim vs. Court of Appeals, G.R. No. 124715, January 24, 2000, 323
SCRA 102 Concept Builders, Inc. vs. NLRC, 257 SCRA 149 (1996).
36
Concept Builders, Inc. vs. NLRC, supra.

267
VOL. 344, OCTOBER 24, 2000
267
SO ORDERED.
Melo (Chairman), Vitug and Panganiban, JJ.,
concur.
Purisima, J., No part.
Petition denied, judgment affirmed with modification.
Notes.Questions not assigned as error may be
considered on appeal if necessary for the just and complete
resolution of the case. (Korean Airlines Co., Ltd. vs. Court
of Appeals, 234 SCRA 717 [1994])
The appellate court is accorded a broad discretionary
power to waive the lack of proper assignment of errors and
to consider errors not assigned. (Catholic Bishop of
Balanga vs. Court of Appeals, 264 SCRA 181 [1996])
An appeal in a criminal proceeding throws the whole
case open for review and it becomes the duty of the
appellate court to correct an error as maybe found in the
appealed judgment, whether it is made the subject of
assignment of errors or not. (People vs. Calayca, 301 SCRA
192 [1999])
The rule that an appellate court may only pass upon
errors assigned, as well as its exceptions, is also applicable
to administrative bodies. (Diamonon vs. Department of
Labor and Employment, 327 SCRA 283 [2000])
The purpose of an assignment of errors is to point out to
the appellate court the specific portions of the decision
appealed from which the appellant seeks to controvert.
(Bayer Philippines, Inc. vs. Court of Appeals, 340 SCRA 437
[2000])
o0o
268
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238

SUPREME COURT REPORTS ANNOTATED

G.R. No. 136456. October 24, 2000.

HEIRS OF RAMON DURANO, SR., RAMON DURANO III,

VOL. 344, OCTOBER 24, 2000